Global Wealth Hits a Rough Patch

Global private wealth hit a speed bump last year. The net worth of the planet’s total population grew just 5.2% last year, to $168 trillion—down from 12% in 2014 and nearly 15% the year before, as shaky financial markets took a toll, according to a report by the Boston Consulting Group, "Navigating the New Client Landscape.”

Still, the number of millionaire households worldwide remained firmly on the rise, increasing 6.3%, the study found. Those families now account for 47% of all global wealth, and the share is on track to hit 52% by 2020. The biggest driver last year was the Asia-Pacific region, contributing 49% of new millionaire households. As Barron’s Penta’s Abby Shultz points out in her piece, “Asia’s $60 Trillion Wealth Takes Europe Down a Peg,” the money in this region comes from the growing economy, not from the markets. A rise in household income is the bread and butter of China’s growth, and the highest shares of it remain invested in cash and deposits. The overall wealth of the region is expected to grow at a less-rapid pace through 2020, held down by a declining level of gross-domestic-product growth.

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Western Europe was the next-biggest producer of millionaire households, accounting for 34% of the total. Unlike the story in many other regions, Western Europe’s existing assets played a key role in bumping up wealth. France and Italy, for example, enjoyed positive stock market performance. The number of households with $1 million to $20 million rose by 9%; those with over $100 million grew by 5%. BCG forecasts that the region will advance steadily, with growth “expected to continue at rates similar to those in recent years.”

In Eastern Europe, the share of wealth held by millionaire households is expected to increase from 55% to 62% in 2020, significantly ahead of the global totals. Here, too, the growth was especially pronounced in the highest reaches of wealth: Households with $20 million to $100 million grew by 9%, and those with over $100 million grew by 12%. Poland and the Czech Republic remain the region’s wealthiest countries after Russia. Household income, as in Asia-Pacific, was the primary driver of strengthening wealth, something of a feat considering the region’s declining equity markets, lowered commodity prices, international sanctions, and conflicts with Ukraine. BCG sees more growth over the next five years, driven mainly by Russian wealth.

North America’s millionaire households, on the other hand, grew by less than 2%. But they continued to account for a firm majority of the region’s private wealth, at 67%. Though still the wealthiest region in the world, North America could face some serious competition from Asia-Pacific soon after 2020, according to the report. Declining equities markets and uncertainty due to the U.S. presidential election could pose serious obstacles, the report says.

The Middle East and African experienced unnoticeable change, with millionaire households already holding more than half of the region’s wealth. Japan saw growth of 4%, to $14 trillion, in private wealth, higher than the previous year’s 3% growth rate.

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